Capital Gains Tax Implications in Morocco
When selling a property in Morocco, the key tax to consider is the capital gains tax (CGT). Typically, this tax is levied at a rate of approximately 20% on the profit made from the sale of the property. However, there are substantial reliefs available:
- If you have owned the property for more than 10 years, the capital gains tax is reduced to 0%. This encourages long-term ownership and investment stability.
- Alternatively, if the property is your primary residence and you have lived there for at least 5 years, you may also be exempt from CGT on the sale.
It is important to note that the capital gains tax rules apply equally to foreigners and Moroccan citizens. Being a foreign seller does not incur any additional CGT or special restrictions on the taxation front.
One important financial consideration is for those who plan to repatriate the proceeds outside Morocco. To do this smoothly, you must have originally registered the foreign currency used to purchase the property with the Moroccan Exchange Office. Without this initial « attestation de change, » it may prove difficult to transfer money abroad after the sale.
Additional Selling Costs in Morocco
Besides the capital gains tax, other selling-related costs need to be factored in:
- Notary fees: Usually around 1% of the sale price. While commonly these fees are split between buyer and seller, in practice the buyer often covers most of this cost.
- Agent commission: Real estate agents typically charge about 2.5% commission on each side of the transaction, although this rate may be negotiated upfront.
- Municipal tax (« Taxe de Plus-value »): This is an additional local tax on the profit, essentially overlapping with the capital gains tax, so it is not an extra cost but part of the CGT framework.
Repatriating Funds from Morocco
For foreigners planning to transfer sales proceeds outside Morocco, proper documentation is essential:
- Keep your « Attestation de change », which shows you initially brought foreign currency into the country at the time of purchase. This is your proof for repatriation and currency transfer clearance.
- Morocco has eased currency transfer limits specifically for documented property sale proceeds, making it easier to send larger sums abroad legally and without delays.
- It is advisable to consult a tax advisor familiar with both Moroccan and your home country laws. This is especially useful for understanding your obligations to report foreign property sales, for example to HMRC in the UK or the IRS in the USA. Sometimes you can claim credit for taxes paid in Morocco to avoid double taxation.
